If your parents help with childcare, they could be missing out on a pension boost worth thousands. Here’s how to sort it and why it matters.
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If your parents help look after your little ones while you’re at work, they could be missing out on a very handy boost to their state pension.
It’s called Specified Adult Childcare Credit, but let’s be honest, no one’s chatting about that over a cuppa.
Here’s the deal.
What is it?
If you’re employed or self-employed and paying National Insurance (NI), you probably don’t need the NI credits that come from your Child Benefit claim.
Since you can only use one credit towards your state pension (and your job already gives you that), the one from Child Benefit usually goes to waste.
That’s where your mum or dad (aka the grandparent as child carers) come in. You can pass the credit to them instead.
They get a year added to their own state pension, just for reading “The Gruffalo” for the 117th time and handing out Pom Bears (yes, I know there’s more to childcare than that).
Why it matters
You need 35 years of National Insurance contributions to get the full state pension.
If your mum or dad had gaps in their work history (perhaps they stayed home with you, took time off, or retired early), it might cause them to fall short.
Each missed year could mean less money when they retire.
One year of credits is worth around £330 a year for life. Over 20 years of retirement, that’s about £6,600.
Not bad for doing what they’re already doing.
Kind of like reverse childcare support
Lots of parents can’t claim any childcare support and might miss out on Universal Credit childcare help or workplace childcare vouchers (which are now closed to new joiners). Even if parents can access these schemes, they can’t be used for grandparents (who provide the childcare) as they aren’t generally Ofsted registered and therefore don’t qualify.
This scheme doesn’t need any of that.
If your mum, dad, nan or aunt looks after your child while you work, this is something you can do to give back, and it doesn’t cost a penny.
Who qualifies?
They can apply if:
- They’re under state pension age
- You (the parent) are claiming Child Benefit for a child under 12
- They look after the child for some or all of the week
- You’re working and not using the NI credit yourself
This applies even if they do just a couple of days a week for things like school drop offs and pick ups, after school care or the school holidays. It doesn’t need to be full time childcare.
Don’t transfer your credits if you need them!
If you’re not working and you need the NI credit from Child Benefit to build up your own pension, don’t transfer it.
You’ll lose the credit for that year, and that could mean getting less money when you retire.
If you’re working and paying National Insurance through your job, you’re already covered. In that case, it’s safe to transfer your unused credit to your parent.
But if you’re not working or on low hours, check your NI record first to make sure you don’t need it.
How to apply
It’s not automatic, and you have to fill in a form. You can do it online or by post, using form CA9176.
You’ll need to give:
- Your details (the working parent)
- Your parent’s details (the grandparent)
- Child Benefit info
- Dates they looked after the child
If they’ve helped out for more than one year, you can apply for each year separately. You can even go back up to 12 years, all the way to 2011.
What’s the catch?
Your parent must be under state pension age in the year they cared for the child. If they’re already claiming their state pension, it won’t count.
Also, only one credit per Child Benefit claim can be transferred, no matter how many children are on the claim.
As I said above, if you’re not working or using the NI credit yourself, you can’t transfer it. It only works if you’re not claiming that credit already.
Why aren’t more people doing this?
Because hardly anyone knows it exists. Around 90% of eligible grandparents don’t claim it. That’s potentially thousands of families missing out on money they’re owed.
If your mum or dad are helping with childcare, even if it’s the school run or a couple of afternoons, this is a real way to say thank you that actually pays off.
Final thought
Helping your mum or dad boost their pension isn’t just a nice gesture; it could make a serious difference to their future finances.
And with prices still rising and bills not letting up, every bit of extra cash helps.
Plus, they’ve probably changed enough nappies over the years to earn it.
Read next:
Looking for things to do over the holidays: here’s 100 budget friendly summer activities for kids.
Naomi knows the burden of living on very little and became debt free by following her own money saving tips and tricks. She is an expert on saving money at the supermarket and side hustles.
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